The right choice on the ports

Published 9:18 pm Wednesday, March 27, 2013

In the end, the right thing happened.

Following a contentious 10-month debate on the future of the commonwealth’s port system, the Virginia Port Authority on Tuesday voted unanimously to reject two private offers to take control of port operations for as much as 50 years in exchange for payments to the state ranging from $3.9 billion to $4.66 billion.

The lower number was proposed by APM Terminals, which launched the process with an unsolicited offer to operate Virginia’s ports for 48 years under the state’s Public-Private Transportation Act. That proposal prompted another, by investment bank JP Morgan, which proposed the 50-year deal with a higher payout for the state.

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Port authority commissioners chose to decline both offers and opted instead to revamp the state-supported, private, nonprofit corporation currently in charge of the ports, Virginia International Terminals. Their decision ensures that Virginia will not cede control of its ports to an out-of-state, private corporation without a clear understanding of the value of the resource that would be given up.

There are a few big reasons the decision was important for Suffolk. First, and most important, the future of the city’s growing warehousing and distribution industry is directly tied to the fortunes of the port facilities just across the city line in Portsmouth and across the water in Norfolk. It is vital to companies like Ace Hardware, Target Distribution and Nexcom in Suffolk that Virginia’s port system is well run and profitable. The state will now retain control of the fate of its own ports.

In a similar vein, port operations in Portsmouth and Norfolk already are having an effect on truck and train traffic through Suffolk. Ensuring the ports are operated in an efficient manner and that the commonwealth continues to maximize the profits it realizes from shipping containers in and out of the port facilities in Hampton Roads should — theoretically, at least — ensure that Virginia will help Suffolk overcome the problems that traffic will cause.

Finally, the debate surrounding the process through which the port proposals were submitted helped focus the spotlight on the glaring problems with Virginia’s PPTA procedures. The legislation was enacted in the 1980s to help the state and its municipalities fund infrastructure projects like roads and sewage systems; it was never intended to serve as an instrument through which Virginia’s most valuable existing assets could be privatized.

The ports proposal from APM Terminals, which Gov. Bob McDonnell’s administration tried to push through with little oversight and even less due diligence, proved the danger of allowing Virginia’s existing infrastructure resources to be effectively put up for quick sale to the highest bidder.

The good news is that the port authority finally understood the value of the resource it oversees and that the process of getting to Tuesday’s decision resulted in legislation that will curb future misuse of the PPTA.